CLAREMONT, Calif., June 30, 2006 (PRIMEZONE) -- Kiwa Bio-Tech Products Group Corporation (OTCBB:KWBT) (the "Company") announced today that it closed the sale of (1) 6% secured convertible notes, in the aggregate principal amount of $857,500, convertible into shares of the Company's common stock and (2) warrants to purchase 12,250,000 shares of the Company's common stock at an exercise price of $0.45 per share. The purchasers of the notes and warrants have agreed to purchase additional notes, which would result in notes having an aggregate principal amount of $2.45 million outstanding.
The sale of the notes requires that the Company file a registration statement covering the resale of the shares issued upon conversion of the notes. The conversion price of the notes is based on a 50% discount of the average trading price of the Company's common stock on the OTC Bulletin Board, which discount will reduce to as low as 40% upon Company's registration of common shares to be issued on conversion of the notes. The conversion price is also adjusted for certain subsequent issuances of any equity securities of the Company at prices below the conversion price then in effect. The notes contain a volume limitation that prohibits the holder from converting further notes if by doing so would cause the holder and its affiliates to hold more than 4.99% of the Company's outstanding common stock. In addition, the holders may not convert more than $120,000 in principal amount of notes per calendar month.
The Company's obligations under the notes and the warrants are secured by a first priority security interest in the Company's intellectual property and by all of the Company's other assets. In addition, Mr. Wei Li, the Company's President and Chief Executive Officer, has pledged all of his common stock of the Company as collateral security for the Company's obligations under the notes and the warrants.
Mr. Wei Li stated, "We intend to use the sale proceeds for general working capital needs and research, development and sale of the Company's bio-fertilizer and anti-viral aerosol agent products, and to pay outstanding obligations to service providers."
The Company continues its progress with the development, manufacturing and marketing of its anti-viral, aerosol delivery, veterinary product to prevent diseases for fowls and livestock, such as avian influenza, swine influenza, Newcastle disease, avian infectious bronchitis, swine infectious gastroenteritis, swine epidemic diarrhea, hog cholera, foot and mouth disease and duck viral hepatitis.
In May 2006, the Company signed an agreement pursuant to which Jinan Ke Long Bo Ao Biotech Co. Ltd, Chinese Academy of Medical Sciences agreed to transfer to the Company its AF-01 Anti-viral Aerosol technology for veterinary medicines. The Company has agreed to payments in cash and stock of ten million Renminbi. Cash payments of six million Renminbi will be paid in installments upon completion of certain milestones. The stock payment will be made within 90 days after the AF-01 Anti-viral Aerosol technology is approved by the appropriate Chinese government department for use as a livestock disinfector for preventing bird flu.
About Kiwa Bio-Tech Products Group Corporation
The Company develops, manufactures, and distributes and markets innovative, cost-effective, and environmentally safe bio-technological products for agricultural and natural resources and environmental conservation. The Company's products are designed to enhance the quality of human life by increasing the value, quality and productivity of crops and decreasing the negative environmental impact of chemicals and other wastes.
For more information about the Company, please visit the Company's website at http://www.kiwabiotech.com. In addition, copies of the Company's filings with the Securities and Exchange Commission are available free of charge at http://www.sec.gov.
This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from any future results described by the forward-looking statements. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the Securities and Exchange Commission. The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release.